Wednesday, September 28, 2016

Hearth of Swiss Horology

***Helvetia, here we come! 

On Sunday afternoon we crossed the German-Swiss border near Schaffhaussen, the home town of IWC.

The wide, no-speed limit German autobahns were behind us, and the narrow country roads of Jura led us slowly to Zurich then further south to La Chaux-de-Fonds, the hearth of Swiss horology. We were on the mission: to visit three second-hand precision machinery dealers who specialize in watchmaking.

Before I go any further: while Switzerland and Germany are neighbours and while German is one of 3 languages officially spoken in Switzerland, there is a huge distinction between the two countries and their citizens.  I am not going to sugar coat it:  I like dealing with Germans, and I absolutely despise the ever-present Swiss corporate arrogance. The Swiss simply lack the humbleness of the Japanese, the flamboyance of southerners, the openness and warmth of eastern Europeans, the American loudness, the curiosity of Scandinavians or, dare I say it, the quirky, self-mocking English sophistication. They cannot be impressed, bought or excited. Swiss don't smile.

Doing business with the Swiss is never a mutually beneficial – from the moment you step on their soil, it is painfully obvious that your presence will be only tolerated for as long as you are happy to pay ridiculously overinflated prices.  And their cuisine just sucks: too greasy, too heavy.

Luckily, the small Swiss second-hand dealers are refreshingly different from the large corporations so despite my prejudice, and despite the fact that most of them only speak French, we do get along well.  But the truth is simple: like it or not, La Chaux-de-Fonds is the epicentre of the world of watchmaking and if you are to buy a precision second-hand tool, this is the place to look for one.

When watch corporations acquire new production lines, the old equipment is on-sold to second hand dealers. The business is still done in secrecy, strictly guarded from newcomers, conducted by third, fifth or seventh generation of family members.  In a city of 35,000 where 20 percent of the population directly work in the watch industry, everyone knows everyone. In just a couple of hours, we've heard all the current gossip: who is hiring and who is firing, who is expanding the manufacturing capacity and who is selling the equipment due to overstock of watches. In a radius of just 5 kilometres, we'd seen the production facilities of 20 brand names. What amazed us, once again, is how closely those 'brands' are interconnected and how closely they rely on each other and their suppliers.

What we call 'in-house' production is more (as Josh said) an intricate web of incestuous relations. Many own shares in each other’s businesses, they sit on each other’s boards, use the same highly specialized component makers, the same raw material and operate the same parts production machines.  And when appropriate, are happy to stab each other in the back.

We saw machines which were 'still hot' just pulled out of production and those that had been sitting in storerooms for 50 years, never to be sold.  And the variety and quantity of stock on offer is simply amazing.  "This one came from xxxx and here is the one from xxxx factory. Would you like the workbench from xxxx? We just got delivery of eight." We saw a row of 50 gear cutters (hobbing machines) and another row of 50 cam operated lathes. This was the very equipment used to manufacture parts for your 1970s Omega Speedmaster or Rolex Submariner, Longines and Zenith. 

Unfortunately, most of them were highly customized, were missing crucial tools or simply were too complex to operate. Or just too heavy or way overpriced. But all of them are still amazingly precise, and when restored would outperform modern CNC machines. Swiss don't throw anything away and you can get anything you want, if you have enough money.

After a couple of days of roaming and seeing thousands of machines, we'd got a fairly good idea what we could use in rebelde production. But we were not in hurry to part with our hard earned cash. We were there to build relationships and make ourselves known as future customers.  More detailed report will follow, including some very exciting photos!

On Tuesday, we decided to visit a company specialising in a very specific area of watchmaking. As much as I would love to, I cannot disclose their name. Let me just say that they produce components so crucial to a watch that even the most prestigious brands are dependent on their supply. Without them there will be no Swiss watches. Now, I have to admit that I was not aware of their importance. If I was, I probably wouldn't have bothered to call. But we were 'in the area' and they actually sell a machine which produces that crucial component, so we had nothing to lose.

The moment we arrived in front of their building I knew that we had actually made a mistake.  But it was too late to turn back - so we bravely stepped in.

Even today, 24 hours later, I still can't figure out what really happened.
The recollection of events is so incoherent - like the recollection of a boxer who was knocked out in the first blow, waking up the next day in hospital.

First, we watched the 20 minute corporate video, probably directed by some Hollywood director. The message was simple: our host was in the watch business before Rolex and before Lange and before anyone else.   The business is privately owned, which is cool, but as the only supplier of the most critical components, they enjoy their own status so much that no amount of money can buy their independence. Yes, they do have a machine to sell to us (although they never sold one to Australia or Africa) but they really don't see the reason why we would want one.

When I was finally allowed to speak, I pointed out that we'd done our homework. We know that we can afford their machine - while we do come from Australia, the money is not an issue. Quickly Josh took over: he clearly explained that we understand their manufacturing technology and that we don't think it is rocket science. We can be trained and we are looking for a partnership.  While the machine itself is impressive, both of us confidently concluded that the machine will be outdated eventually, and that we will be investing in a 'niche of the niche' so the resale value of their machine is zero - and that is zero in any currency.

Our host agreed. Fine, if we insist, the machine can be ours for $300,000. However, the contract of sale will include a clause which stipulates that we will be trained to operate the machine but we will not be trained to actually make components; the machine itself will be supplied with no tools, therefore it would be our job to work out who the tool suppliers are and which material to use to produce components.  Roughly, if we are clever enough, in 20 years we'll be making that critical component 'down under'.

In my books, this sounded like an insult. The time came to shake hands and thank our host for the opportunity to learn more about corporate Swissness. To keep the record straight: on the way out we got two Swiss chocolates wrapped in company colours. But the aftertaste is still bitter.

The good news is that a number of small independent watchmakers in both Germany and Switzerland are working hard and investing heavily in watchmaking technology.  In 5 or 10 years from now, there will be other players in the field. No one stays on the top forever, and often an underdog comes with a revolutionary or cost effective solution and solves the 'unsolvable' problem.

rebelde is not in a hurry, and right now, we already have so much on our plate to keep us busy for years to come. However, after this meeting, we clearly defined our priorities: we will be doing business only with suppliers who see us as equal and who understand and respect our mission. rebelde will bow down to none!

[to be continued...]

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